UK’s Social Stock Exchange: Unlocking the Effect of Its Closure on Total Factor Productivity of Social Enterprises

Abstract

This study delves into the after-effects of the closure of Social Stock Exchange in the UK (UKSSE) on the total factor productivity (TFP) of Social Enterprises (SEs) which were members of the UKSSE. Through the lens of a Difference-in-Differences (DID) framework, this study sheds light on the impact of the closure on TFP of the UKSSE member-firms (Treated Group) as compared to non-members (Control Group) for the 2015–2018 and the 2019–2020 periods, before & post the closure of the UKSSE in 2018, having firm, year, and industry-specific characteristics as controls. The research findings indicate significant TFP loss for SEs belonging to SMEs category on UKSSE as compared to their counterparts. Thus, with the closure of UKSSE, TFP of SMEs (Treated group) decreased more than SMEs (Control group), reflecting the challenges faced in the absence of dedicated SSE support. This study provides valuable insights into the adverse consequences of the closure, informing policy makers and regulators that reintroducing an SSE, built as a regulated trading platform, will be an important initiative especially for the SEs belonging to SME category in the UK. Drawing on this study, decision makers and regulators situated in other parts of the world too can consider setting up an SSE in their country.